Who Are Your Profitable Customers

Who are your most profitable customers? Knowing your best customers and their value can help you find more like them within your current market or new market expansion. Not all customers offer the same business value, so it’s important to distinguish between the most and least profitable customers.

Who Are Your Profitable Customers

A clear picture of your customer’s value is key to developing and implementing successful marketing and customer relationship management programs. Such knowledge helps you effectively target your promotional, advertising, and marketing campaigns to your audience.

Before you can find new customers and increase profits, you need to understand who your most profitable customers are. The key is to first analyze your customers by developing a snapshot of a customer’s value. Use the information you have about your customers to understand their value. You can differentiate between your most and least profitable customers using these methods:

• Calculate the average amount a customer spends in a single transaction
• Multiply across the number of transactions in a year
• Multiply by the number of years a customer stays a customer
• Factor in the customer purchase amount or the transaction frequency

These calculations can reveal how much each customer spends, how many resources your business ties up, and profits you make on their business. Now that you better understand who you’re already selling to you can develop a marketing plan to reach new customers. Here are a few suggestions on how you can gain new customers:

Referrals are perhaps the best affirmation of customer satisfaction. It’s also a way to gain customers with the highest retention rates. These customers tend to purchase more over time and in turn become a source of additional referrals.

Communicate to others in your network what type of customer you’re looking for. This is an effective way to reach new customers in your target market.

Strategic Alliances
Establish an agreement between a business to pursue an agreed upon objectives needed while remaining independent organizations. As long as there is continued value to the shared audience, strategic alliances produce streams of referral business.

You should continually review the value of your existing customers. Over time, customers who used to be highly profitable might want lower prices. Pay attention to your customers’ future potential as well. It may be worth cultivating a relationship with a small customer with high growth potential.

Tagged with: ,

1 Comment on “Who Are Your Profitable Customers

  1. I really wanted to make a simple message to say thanks to you for those superb pointers you are showing at this site. My considerable internet investigation has at the end been rewarded with brilliant ideas to exchange with my good friends. I would tell you that most of us website visitors actually are really blessed to be in a fabulous site with many awesome individuals with beneficial tricks. I feel truly happy to have seen the webpages and look forward to many more awesome minutes reading here. Thank you once again for all the details.

Leave a Reply

Your email address will not be published.